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Below is quote On A stronger Dollar keeps Gold prices in check whilst Oil prices extends fall on a gloomy outlook By Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd 

A dovish approach by the US Federal Reserve underpins Commodities

A stronger Dollar keeps Gold prices in check whilst Oil prices extends fall on a gloomy outlook.

Gold

On Tuesday, Spot Gold ended lower by 0.2 percent to close at $1809.9 per ounce as global investors turned cautious ahead of the key US economic data for cues on the US Federal Reserve’s stance in the months ahead.

Gold prices remained elevated in the past week the US Central Bank kept interest rates unchanged and didn’t give any fixed timeline on tapering of its expansionary approach in wake of the delta variant of the virus and a weaker labor market.

Markets will continue have a keen eye on the US non-farm payrolls report due later in the week in order to gauge the health of the labor market in the world’s largest economy.

However, a weaker than expected US manufacturing activity data weighed on the Dollar and the US treasury yield which levied some support for the bullion metal.

A stronger US Dollar ahead of key US economic data due later in the week might continue to weigh on Gold prices; however, rising cases of the Delta variant of the Covid19 virus is expected to keep the demand for the safe haven elevated.

Crude Oil

On Tuesday, WTI Crude ended lower by 1 percent to close at $70.6 per barrel extending the fall from the earlier sessions as rising cases of the Delta variant of the Covid19 virus clouded the outlook for the global Oil market.

Crude Oil remained under pressure earlier in the week as worries over slow growth in China’s industrial sector amid OPEC increasing their Oil production dragged the prices lower.

OPEC’s plan to boost output by 400,000 barrels per day from August’21 to December’21 amidst slow growth in China’s industrial sector and the widespread of the virus ignited oversupply worries in the global markets.

Also, as per Reuters survey, the OPEC groups Oil output rose to their highest levels in over a year in July 2021 which further pressured Oil prices.

A bleak demand outlook following the slowdown in China and widespread of the new variant of the coronavirus amid increase Oil production by OPEC might continue to weigh on Oil prices.

Base Metals

Increasing number of infected cases around the globe raised worries of further slowdown in the global economic recovery which pressured industrial metal on the LME in yesterday’s session. That, coupled with slow growth in the industrial activities in US & China further weighed on market sentiments.

Copper

LME Copper ended lower by 1.64 percent as widespread of the virus undermined market sentiments. Also, the protestors ended the road blockade near the Las Bambas Copper mine (which began on 23rd July’21) after the country's new prime minister Guido Bellido vowed to bridge the gaps between the Peruvian residents and the company in a couple of months which took some pressure off the Copper supply chain.

However, the labour union representing the workers at BHP’s Escondida mine, the world’s largest Copper deposit, announced that the members have voted for a strike after finding the company’s final offer insufficient. This takes the negotiations to a mediation period aimed at avoiding the strike. Copper prices might test higher levels as escalating worries over a potential strike hints towards disruption of the global Copper supply chain. The Escondida mine, situated in Chile, produced 1.18 million tonnes of Copper in 2020 and 426,700 tonnes in the first five months of 2021.

An evident slowdown in China industrial sector clouds the demand prospects in the world’s largest metal consuming nation which might continue to pressure the industrial metals.

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